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7 J. Comp. L. & Econ. 133 (2011)
The Antitrust Consumer Welfare Paradox

handle is hein.journals/jrcolaec7 and id is 135 raw text is: Journal of Competition Law & Economics, 7(1), 133-164 doi: 10.1 093/joclec/nhq0 19 Advance Access publication 1 December 2010 THE ANTITRUST CONSUMER WELFARE PARADOX Barak Y Orbach * ABSTRACT Consumer welfare is the only articulated goal of antitrust law in the United States. It became the governing standard following the 1978 publication of Robert Bork's The Antitrust Paradox. The consumer welfare standard has been instrumental to the implementation and enforcement of antitrust laws. Courts believe they understand this standard, although they do not bother to analyze it. Scholars hold various views about the desirable interpretations of the stan- dard and they selectively use random judicial statements to substantiate oppo- site views. This article introduces the antitrust consumer welfare paradox: it shows that, under all present interpretations of the term consumer welfare, there are several sets of circumstances in which the application of antitrust laws may hurt consumers and reduce total social welfare. This article shows that, when Bork used the term consumer welfare, he obscured basic concepts in economics. This article clarifies that the antitrust methodology permits only surplus analysis and does not accommodate welfare analysis. It explains the conceptual differences between the terms surplus and welfare and the rel- evant implications. This article further explains the differences between two other competing standards-consumer surplus and total surplus-that presently serve as proposed interpretations for the term consumer welfare. Each interpretation has some limitations and the necessary analytical progress calls first for conceptual clarity. This article argues that whatever good ends the consumer welfare phrase may have once served, antitrust law should now lay it to rest. J7EL: D60; K21; _AO; L51 I. INTRODUCTION All antitrust lawyers and economists know that the stated instrumental goal of antitrust laws is consumer welfare, which is a defined term in * Associate Professor of Law, the University of Arizona. E-mail: barak@orbach.org. This article benefited from comments and criticism from Jean Braucher, Grace Campbell, Steven Edwards, Harry First, Josh Gray, Herbert Hovenkamp, Louis Kaplow, John Lopatka, Frances Sjoberg, Carol Rose, Simone Sepe, Danny Sokol, David Tadmor, and the participants at the 2010 Next Generation of Antitrust Scholarship Conference. All errors, mistakes, and inaccuracies are mine. © The Author (2010). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com

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